Tesla Posts Best-Ever Quarterly Revenue And Profit

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Topline

Tesla beat analyst expectations in its fourth-quarter earnings report Wednesday, as the electric vehicle giant led by the nation’s wealthiest man Elon Musk grapples with a dim macroeconomic outlook and growing investor frustration toward Musk’s behavior.

Key Facts

Tesla reported $24.32 billion in revenue in the fourth quarter of 2022, a 37% increase from the same timeframe a year prior and coming in above the $24.16 billion forecasted by analysts.

Profit came in at $1.19 per share, or $3.7 billion, far surpassing to the analyst consensus of $1.13 earnings per share.

Tesla shares soared as much as 4% to $149 in after hours trading.

The stock is up 34% year-to-date and gained 0.4% Wednesday after rallying to reverse a broader tech selloff following Microsoft’s bleak earnings report after Tuesday’s close.

Tesla slashed prices on its cars by as much as 20% earlier this month in a surprise move that Morgan Stanley analysts called a “response to slowing incremental demand relative to incremental supply.”

Key Background

Tesla’s latest earnings marks “one of the most important moments in the history of Tesla and for Musk himself,” Wedbush analyst Dan Ives declared in a Tuesday note, explaining: “Tesla faces a darker macro in 2023 with fierce competition coming from all angles,” and Musk “has cast a dark shadow over Tesla” thanks to the “Twitter fiasco.” Ives is referring to Musk’s $44 billion acquisition of the social media company, finalized in October after six months in which each party aired their dirty laundry. Musk has served as Twitter CEO for the last three months, though he’s indicated he hopes to soon name a replacement. Tesla stock tanked as Musk offloaded $22.9 billion worth of his shares in the company to finance his Twitter deal, though Musk vowed in December to not sell any more Tesla stock for at least two more years. But Musk furthered his commitment to Twitter on Wednesday, changing his profile name on the site to “Mr. Tweet” and admitting to the struggles of balancing running the social media giant and Tesla, writing, “It is not possible for me to fix every aspect of Twitter worldwide overnight, while still running Tesla and SpaceX, among other things.”

Big Number

$467 million. That’s how much Tesla received in automotive regulatory credits, roughly 2% of all revenues. The credits, which Tesla sells to other automakers coming in below federal emission guidelines, are a key driver of the company’s profitability as Tesla can pocket nearly all of the sales.

Forbes Valuation

We estimate Musk to be worth $160 billion, less than half of his fortune’s $320.3 billion peak in November 2021 as Tesla shares tumbled roughly 65%—far more than the tech-heavy Nasdaq’s 30% decline over the same period.

Tangent

Musk testified in San Francisco federal court for about nine hours this week as part of a civil lawsuit seeking billions in damages from Musk over his infamous 2018 tweet saying he secured funding to take Tesla private at $420 per share, causing shares of the company to gain 6% before falling dramatically. The billionaire said 420’s association with marijuana was purely coincidental and testified he believed he “was doing the right thing” in tweeting out what he believed to be material nonpublic information to benefit retail investors.

Surprising Fact

Only 13.4% of Americans have a favorable view of Tesla, according to a survey from Morning Consult earlier this month, the company’s lowest net favorability since the polling firm began tracking in January 2022, when 28.4% of respondents thought positively about Tesla.

Further Reading

Tesla’s Brand Is Tanking, Survey Finds (Forbes)

Big Tech Stocks Lose $200 Billion After Microsoft Sets Off Earnings Recession Whistles (Forbes)

Elon Musk Trial: Tesla CEO Says ‘I Thought I Was Doing The Right Thing’ In Testimony Over Tweet (Forbes)

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